Union presses for cuts to contract spending

Feb. 11, 2013 - 04:23PM
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Federal agencies could find 70 percent to 90 percent of the $85 billion in sequestration budget cuts by scaling back spending on services contracts, according to a new report commissioned by the American Federation of Government Employees.

AFGE, one of the leading federal employee unions, has denounced the White House for targeting federal employees in its sequestration guidance — by urging agencies to considering hiring freezes and furloughs, for example — while not ordering similar cuts to government contracts.

Charles Tiefer, a government contracts law professor at the University of Baltimore law school and a former commissioner on the Commission on Wartime Contracting in Iraq and Afghanistan, said in a report released Monday that agencies have several options for cutting contract spending that do not necessarily require breaching contracts or incurring penalties.

The easiest step, he said, would be to not award new task orders on some indefinite-delivery, indefinite-quantity — or IDIQ — contracts, or to award smaller and less frequent task orders. Under IDIQ contracts, agencies can choose to award new task orders once a minimum order has been reached, but they are under no obligation to do so. This could help agencies rein in their information technology services spending, Tiefer said.

Many agencies often hold down spending until the end of the fiscal year, and then issue a flurry of IDIQ task orders in the last few weeks so they don’t have to return unspent funds, he said.

“It would be perverse if agencies constrained by sequestration furloughed their federal employees in March and April, only to spend some or all of the savings on the usual last-minute, capricious and nonessential task orders in July and August,” Tiefer said.

Agencies could also reduce spending on current contracts and task orders through partial terminations for convenience, Tiefer said. Under that method, an agency could decide that a particular contract should end earlier and with less work than originally planned. Regular work schedules could also be reduced that way, Tiefer said, such as by having a janitor only perform custodial services two out of every three weeks, instead of every week, Tiefer said.

Or, Tiefer said, agencies could reduce spending through so-called bilateral modifications — in which agencies and contractors agree to reduce the scale of a contract — or through deductive change orders.

Tiefer said his report focused only on the options available to federal agencies for reducing contract spending, not on how the cuts would affect government operations.

AFGE said its members will use Tiefer’s report to urge Congress to look for ways to cut contract spending if sequestration goes into effect when they meet with their lawmakers Tuesday.

But the Professional Services Council, which represents federal contractors, is arguing against such steep cuts to contract spending. PSC executive vice president Alan Chvotkin said such cuts “would cripple the government and devastate the economy.”

Many government contractors are already reeling from cuts, he said. For example, Lockheed Martin last week said it is offering buyouts to midlevel managers in its information systems and global solutions unit.

“This petty ‘us vs. them’ debate must end,” Chvotkin said. “Right now, both federal and contractor employees are feeling and will continue to feel the fiscal pinch. We must work together to help the government find the savings required.”